Korean Battery Makers Expand ESS Push in North America

LG Energy Solution’s JF2 AC Link product, which has joined Nvidia’s DSX Ready program. (Photo provided by LG Energy Solution) As the North American Energy Storage System (ESS) market rapidly grows due to the surge in power demand following the expansion of artificial intelligence (AI) data centers, the domestic battery industry is accelerating the transition of its business structure. According to energy research institutes such as Wood Mackenzie on Oct. 15, the U.S. ESS installation volume is expected to increase by about 37% from 51GWh last year to 70GWh this year. It is expected to expand to more than 110 to 120GWh in 2030. ESS is a device that stores electricity when power demand is low and supplies it when demand surges. As facilities that consume a large amount of power and require a stable power supply, such as AI data centers, increase, the demand for ESS is also increasing. Nvidia is also strengthening the connection between data center power infrastructure and ESS. Battery energy storage systems (BESS) were included as the first certification category in the ‘DSX Ready’ certification program, which Nvidia launched last month to standardize the design of power infrastructure and cooling systems for AI factories. The non-China supply chain policy and tariff system of the United States are also cited as opportunity factors for the domestic battery industry. This is because the relative price competitiveness of Korean companies can increase if the tariff burden on Chinese batteries grows, in addition to tax support such as the Advanced Manufacturing Production Credit (AMPC) and the Clean Electricity Investment Tax Credit (ITC) under the Inflation Reduction Act (IRA). In the United States, a 40.9% tariff rate has been applied to Chinese lithium-ion batteries since last July, while a 12.5% rate is applied to Korean batteries, resulting in a tariff rate difference reaching 28.4% points. Under these circumstances, the three major domestic battery companies are expanding their ESS business by utilizing their North American production bases. LG Energy Solution plans to expand its North American ESS production capacity from about 57GWh this year to 73GWh next year. The plan is to strengthen its ESS supply capabilities by utilizing existing North American production bases, including the Holland and Lansing plants in Michigan, the Ultium Cells joint venture, and the Honda joint venture business in the United States. LG Energy Solution is the only domestic company to have been selected as a BESS partner company for Nvidia’s DSX Ready. Samsung SDI is also pushing for a plan to expand its North American production capacity to 32GWh in 2027 by utilizing production lines such as its Indiana plant in the United States and the Stellantis joint venture (SPE). SK On aims to start mass production of lithium iron phosphate (LFP) batteries at its Georgia plant in the United States from the second half of this year. LFP batteries are highly utilized in the ESS market where price competitiveness is important, making them a product that can diversify the North American business portfolio. An industry official said, “The battery industry is expected to strengthen its strategy of securing ESS as a new demand source to increase the utilization of production capacity,” adding, “If the non-China supply chain policy, tax benefits, and production line conversion effects are combined, the North American business competitiveness of domestic battery companies can be further strengthened.”